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By Marina Lopes
WASHINGTON, July 9 IBM announced on Wednesday it
will invest $3 billion over the next five years in chip research
and development in hopes of finding a game-changing breakthrough
that can help revive its slumping hardware unit.
IBM announced the plan a week before its widely anticipated
second quarter earnings. Last quarter, sales in its hardware
sector plunged 23 percent from a year earlier and the company
posted its lowest quarterly revenue in five years.
IBM hopes to find ways to scale and shrink silicon chips to
make them more efficient, and research new materials to use in
making chips, such as carbon nanotubes, which are more stable
than silicon and are also heat resistant and can provide faster
"The message to our investors is that we are committed to
this space, we believe there is great innovation possible that
will be necessary in world of big data analytics, said Tom
Rosamilia, senior vice president of IBM's Systems and Technology
"These are essential ingredients in delivering the kind of
performance the world will demand. The world is demanding it now
and will continue to demand it for the next 10 years," he said.
The investment is equal to half of all IBM's research and
development last year. The company is preparing to divest its
chip manufacturing business to focus on intellectual property.
The company is rumored to be close to a deal with chipmaker
At an investor briefing in May, IBM's Chief Financial
Officer Martin Schroeter said new research and development was
essential to refreshing the hardware sector, which he expects to
stabilize in 2014 and grow in 2015.
Silicon chips, which have been made smaller every year, are
reaching a point of diminishing returns, preventing chips from
delivering performance improvements demanded by new technology,
the company said.
"You might say this is not a good time to be in the silicon
chip business, but it is a great time to be ready for the next
thing. This is the next thing," said Richard Doherty a research
director at The Envisioneering Group in Seaford, NY.
IBM is the only major company investing in carbon chip
research. As demand grows for faster speeds, the investment
could put it miles ahead of competitors like Oracle and HP, said
Most electricity going through silicon chips gets released
as heat, said Doherty, with only 30 percent going toward
electricity. "Silicon-electron mobility is like moving through
snow. You can't run as fast," he said.
One substance IBM has already done some research on is
graphene, a pure carbon through which IBM says electrons can
move 10 times faster than in silicon. The company plans to
invest more on research in this area.
The new chips would allow for faster computing processes
that could lead to artificial intelligence and high power
cognitive computing. The company hopes the investment will lead
to technology that allows computer systems to emulate the
brain's efficiency, size and power usage, it said.
(Reporting By Marina Lopes; Editing by David Gregorio)